Author

Date of Graduation

Document Type

Degree Name

Degree Level

Undergraduate

Department

Agricultural Economics and Agribusiness

Advisor

Popp, Jennie

Reader

Popp, Michael

Second Reader

Pittman, Harrison

Abstract

The Farm Bill now allows for the legal production and research of industrial hemp as long as it meets the standards outlined in the Farm Bill. The bill passed by the House of Representatives states, “To amend the Controlled Substances Act to exclude industrial hemp from the definition of marihuana, and for other purposes” (House of Representatives, Bill 525). Prior to the passing of this bill, farmers were not allowed to produce industrial hemp. Industrial hemp is defined as, “the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis” (qtd. in Johnson). Although it has a wide range of uses (upwards of 25,000 products use hemp), due to its very recent legalization for widespread production, there is a lack of updated information regarding the economic feasibility of hemp production by the private agricultural sector.

First, through an extensive search of existing legal, political and economic literature information was gathered to construct an enterprise budget for industrial hemp. This constructed enterprise budget was then used to compare an industrial hemp crop in Arkansas to the rest of the crops that are produced in Arkansas. This was done using a constrained linear programming model that optimizes farming acres in all 75 counties of Arkansas to examine the best (most profitable) crop for each acre.

When industrial hemp was introduced in the model, the total amount of acres farmed increased by 2.8% - 4.4%, the statewide profit increased by 0.3% -18.2%, and rice was the only crop that increased in acreage by 5% when industrial hemp was introduced.

Analyzing cost and potential returns using the enterprise budget and the results from the comparison with other commercial Arkansas crops in the constrained linear programming model, industrial hemp looks to be a promising crop. There are still hurdles to overcome, however. The lack of clearance by the DEA and the absence of hemp processing facilities in the United States are clear roadblocks to hemp production. Once the DEA consistently grants permits for hemp production, there needs to be research gathered for optimal locations of processing facilities and target markets for hemp goods.